Amid deflationary concerns inflation rose 3.2% in retail markets in February compared to last year, the Pakistan Bureau of Statistics (PBS) reported earlier today.
Inflation, as measured by the Consumer Price Index (CPI), remained at an 11-year low for the fourth consecutive month, at 3.24%, the national data collecting agency said. The CPI indicator tracks prices of 481 commodities every month in the retail market.
The marked slowdown in inflation sparks expectations of a further cut in the discount rate. The State Bank of Pakistan (SBP) slashed the discount rate by 100 basis points to 8.5% in its last monetary policy announcement. Some board members were in favour of at least a 150-basis-point reduction, but the finance secretary, who is also a board member, supported a 100-basis-point reduction.
The Wholesale Price Index that captures prices in the wholesale market decelerated for the third consecutive month and clocked in at negative 3.4% in February over February last year, PBS said. According to independent economists, the impact of reduction in prices in the wholesale market appears in the retail market with a time lag of about six months.
